Mcebisi Jonas joining MTN seen as a corporate coup

Former Deputy Finance Minister Mcebisi Jonas, speaking at the Open Book festival at the Fugard Theatre in Cape Town, has been appointed a director at MTN. Picture: Henk Kruger/African News Agency/(ANA)

JOHANNESBURG - Africa’s biggest cellular provider MTN yesterday recorded a major corporate coup, unveiling former Deputy Finance Minister Mcebisi Jonas as a director just weeks after he was appointed as one of President Cyril Ramaphosa’s investment envoys.

The company announced Jonas’s appointment to the board of directors alongside Swazi Tshabalala, as it continued to restructure its leadership team and to restore its credibility in the market.

Momentum Securities analyst Sibonginkosi Nyanga described Jonas and Tshabalala’s appointments as a master stroke, as both were held in high regard in the market.

Nyanga said MTN needed credible leaders to take the company forward, following its recent fall-outs with authorities in countries such as Nigeria.

He said Nigeria was an important market for MTN as the group controlled 57percent of the market share there.

“MTN is doing well, because they are working on their network. They are number one in Nigeria in terms of their Net Promoter Score,” said Nyanga. “It’s one of the biggest networks in that jurisdiction.”

In 2016 Nigerian Authorities fined MTN $1.7billion (R21.23bn) for failing to disconnect more than 5million unregistered SIM cards in Africa’s most populous country.

MTN briefly lost its position as the continent’s most valuable telecommunications company as the fine dipped its market capitalisation below that of its biggest rival Vodacom.

The fine led to the unceremonious resignation of former chief executive Sifiso Dabengwa, following accusations by Nigeria that its practices in the country have obstructed the fight against Islamist militants and Phuthuma Nhleko’s return to the helm.

Nhleko spent months negotiating the fine before making way to former Vodacom executive Rob Shuter to succeed Dabengwa.

Yesterday MTN said that it had upped its subscriber base in Nigeria to 2.3million in the quarter ended March from 2million in the fourth quarter of 2017.

Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said MTN was ticking all the boxes for its successful turnaround strategy. “This pertains to its changing of the board and the management team. You want objective and skilled people to come and take over and drive the turnaround strategy,” said Takaendesa.

“I think it’s a positive sign that MTN are strengthening the independence of the board.”

Takaendesa said MTN was cleaning up its image in Nigeria. “They have re-engineered the whole management team with very experienced industry guys, some of them come from Vodacom and Telkom. They have put together a very strong management team,” he added.

Last week MTN said that its group data revenue grew 26.9percent during the quarter to end March, mainly as a result of the rollout of its dual-data strategy aimed at boosting data coverage across its footprint of 22 countries.

The group also reported a 5.4percent group voice revenue growth, buoyed by strong growth in Nigeria and Ghana of 15.2percent and 20.6percent respectively. Group service revenue increased 9.1percent.

MTN Nigeria chief executive Ferdi Moolman said the performance reflected the continuation of the positive momentum evidenced in the second half of 2017 following a period of increased investment and renewed focus on operational execution.

Moolman said MTN continued to engage with the regulatory authorities on their rollout obligations as well as on interference on the spectrum band. “In our work to ensure we remain compliant with all appropriate regulations, we continue to proactively engage with the regulatory authorities,” said Moolman.

Efficient Group chief economist Dawie Roodt said the financial crisis of 2008 resulted in many corporate companies found wanting in terms of compliance.

Roodt said MTN was trying to fix its image by getting high profile individuals like Jonas.

“You have to have responsible people on the board who will oversee the business,” Roodt said. “Getting the right people on board, especially independent directors, is very important. MTN is much bigger than Vodacom in Africa.”